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Yes Voters to Lisbon, Do you want this to happen to your currency?
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19-06-2008 8:04pm#1
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:rolleyes: dude seriously come on :cool: what will all the tinfoil hat people coming out of the closet
yet another "lets leave the EU" threads around here
anyways you cant seriously compare the jolly olde europe to that backward monstrosity across the pond, when we start calling french fries liberty fries i will start to worry
anyways heres one for you if the oil prices switch to euro it will push the us economy further down the drain, wouldn't the conspiracy theorists like youself love when capitalist pigs get what they deserve?0 -
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It's a little more complicated than that. All that'll happen is that the dollars unique advantage will be no more.
Plus, it says other countries are switching to currencies other than the euro aswell. What'll probably happen is that there will be no single world currency anymore. Rather a mix of euro, GB pounds, swiss francs etc..
It's pretty clear that the dollar is fcuked though. That's probably why they're talking about creating the Amero. Kind of a copy of the euro.
I don't see how the Lisbon treaty fits into this though..
Doesn't matter now - i'm officially a looney
It would be interesting to hear some educated debate on the banking videos however, someone.. anyone to refute that these banks can create money in the manner described..0 -
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Well, gold was used by everyone to measure wealth up until 1970. Surprising you think that's stupid.Antithetic wrote: »"But if you divide this by the price of gold, real money in our opinion...."
If you divide the Dow by the price of curry chips in Abrakebabra, real money in my opinion, you get an equally stupid comparison.
Robert Newman, a History of Oil has a funny analogy. Something with Salvador Dali. A bit more here
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Mahatma coat wrote: »I get accused of posting indicipherable ramblings now and again, but you sir take the cake.
I dunno bout the rest of ye but I can see gold as being a much more reliable store of Wealth than curry Feckin chips.
OP do a search we've had this topic before, theres a long thread where nothing gets answered abd a few more interestin questions are raised.
dont expect an answer from anyone in the Economics forums, they will just say yer silly and confused without actualy clarifying anything
The price of gold is as subject to the laws of supply and demand as anything else.
It's also very restricted in supply, it's far less flexible than say human labour. As I said, I could be working right now. To that end, national product (which people use money to trade in) is far more flexible than gold. So supply of labour/creation of wealth can increase more than the supply of gold. So if you tie money to gold you're left with an inadequate supply. Inadequate supply of money can be just as bad a problem as over-supply.
People say "but we used gold as the monetary base prior to the 70s." Correction: gold was used as the monetary base since the Bretton Woods conference at the end of the war. Now Berlin was divided into four jurisdictions over the same period; is the change of that necessarily bad? :pac: Moreover, there was a reason the gold standard was scrapped. It's called the Unholy Trinity. I presume you agree it's a good thing to have free capital flows. If that's the case, you then must choose between either a fixed currency or an independent monetary policy. I think we can both agree, but probably for different reasons, why having a monetary policy is better.0 -
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My leavin cert Economics teacher wrote that book
I make stuff.
Well how do so many people say
I did X this week and got paid Y
what are rhey getting paid for, and what with?
I'm sorry that some of you find these questions simplistic, but start with the simple questions0 -
Oh yeah, I feel somewhat sorry for you that you dontdiogeness wrote:actually produce anything of tangible value at the end of our working day
says a lot
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Mahatma coat wrote: »Oh yeah, I feel somewhat sorry for you that you dont
says a lot
I make movies for a living Mahatma, they're not really a tangible thing, as John Boorman said "I turn money into Light".what are rhey getting paid for, and what with?
I'm sorry that some of you find these questions simplistic, but start with the simple question
They're not simplistic they're infantile, if you want to learn about economics read about economics, don't just sit on a thread and go
"But why? I don't understand, over and over again".0 -
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Antithetic wrote: »The price of gold is as subject to the laws of supply and demand as anything else.
It's also very restricted in supply, it's far less flexible than say human labour. As I said, I could be working right now. To that end, national product (which people use money to trade in) is far more flexible than gold. So supply of labour/creation of wealth can increase more than the supply of gold. So if you tie money to gold you're left with an inadequate supply. Inadequate supply of money can be just as bad a problem as over-supply.
People say "but we used gold as the monetary base prior to the 70s." Correction: gold was used as the monetary base since the Bretton Woods conference at the end of the war. Now Berlin was divided into four jurisdictions over the same period; is the change of that necessarily bad? :pac: Moreover, there was a reason the gold standard was scrapped. It's called the Unholy Trinity. I presume you agree it's a good thing to have free capital flows. If that's the case, you then must choose between either a fixed currency or an independent monetary policy. I think we can both agree, but probably for different reasons, why having a monetary policy is better.
Ok, points taken on the non practicality of a currency tied to gold. However what Im still skeptical of is this loan ratio whereby banks lend up to 9 times the amount they have on deposit.
Also interesting to me is that fact that if I purchase a mortgage I end up paying a multiple of that house price to a high street bank, yet the suppliers, vendors, builders etc all get paid out of the purchase price.
The people who have typed in : €500,000 into my account and paid for staff overheads have the privilege to charge me a multiple of this sum over 30 or 40 years, and this loan does not appear to need to be backed by anything of real value (gold).
I'm taking a very pragmatic approach to this viewpoint however and if someone can prove I shouldn't be skeptical I'll retain an open mind..0 -
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Antithetic wrote: »Hurrah! \o/
The builders build for at a cost of x and charge you 1.33x (or whatever their margin is). Banks lend you 1.33x and charge you 1.6x (or whatever their margin is). This is normal.
Let's consider the insurance market. If everyone in Ireland was to crash their car tomorrow, the insurance companies would go bankrupt. What are the odds of this happening? Essentially zero. If 10% of the population crashed, the companies would probably still go bankrupt. The odds of this happening are still essentially zero, too, though. There's a very small "cost" to society that if everyone crashes, we're all ****ed. I'll accept that outright.
But what are the advantages? Well if you make the fairly reasonable assumption that no more than 10% of people are going to crash in any one day, insurance firms only need to hold reserves for 10% of the value of all the cars in Ireland. This means they can charge lower premiums and this means lower prices for consumers. They make a profit and deserve it for two reasons. The first thing they're doing is managing risk, and taking on the risk that 10% of cars will crash and they'll make no money. The second is that they're providing peace of mind for people which is also important.
Consider the similar scenario with banks. It's highly unlikely that everyone will run and remove their savings tomorrow. If they do, we're all ****ed. But if you allow banks leeway in how much they'll lend, the interest rate falls. From an ethical point of view, this is good as it's the opposite of usury. In that sense, calling for a reserve ratio of 1:1 is promoting a form of usury in that it will definitely lead to significantly higher interest rates as there's less credit available. Allowing fractional reserves also stimulates the economy, so people aren't unemployed. A bit like insurance companies, banks make a profit for managing risk and providing loans to students/mortgages to newly-wedded couples etc etc etc.
You have to measure the costs and benefits of these systems and it's helpful to keep the insurance analogy in mind in this regard. I don't think any reasonable person thinks the optimal reserve fraction is 1:1. The correct level is essentially a matter for the mathematicians to work out.
Thankfully, the greedy banks actually work in the consumer's interest here. If you default on a loan, banks lose money. Look at the hit to banks' share prices over the last year for proof. So it's not in their interest to loan to unworthy customers. Similarly they can't lend money if they run out of cash, so it's not in their interests to have too few reserves. Does this reliance of the mutual interest work? Well ask yourself how many people do you know have lost money by putting it into their current accounts?
Now of course sometimes the system fails. In fact don't be surprised if one Irish bank becomes illiquid over the next six months. (Don't worry, if that happens there will be intervention to ensure nobody loses out except the bank itself.) But by and large it works extremely well and the benefits of lower interest rates are incalculable. If you're taking a dogmatic approach that lending money you don't have is immoral, well then you're taking a dogmatic approach and that allows me to take an opposing view that enforcing higher interest rates is immoral.
The final point of "backed up by something" is entirely misled. You're not seeing the broad picture. The government pay me to suggest economic policy. What determines how much I get paid? How much is that "worth"? Why is it worth more than the admin downstairs? It's interesting because if a very left-wing government got into power, I'd be let go. My advice would not fit in with their policy and is suddenly useless. It's the same guy providing the same economic analysis, but now I'm on the dole and admin are getting paid more than me. What's changed?
The answer is supply and demand. "Backed up by something" is determined only by supply and demand, which are both subject to change. If we tie it to gold and we find that the Galtee Mountains are actually made of gold, we'll have a huge inflation problem as "money" is now far more available. Sure, we can set the price of gold, but who says demand for it won't change and nobody will buy it at that price? "Backed up by something" is a load of shite because nothing is fixed. Furthermore, if you're tied to gold, you can't move interest rates to steer the economy. This is just stupid. All for what? "To be backed up" by something which isn't backed up. Once the statute exists that says legal tender must be accepted for debts, then I know the €10 in my pocket is valuable. Moreoever, the value of the €10 is set by the Central Bank and not by the chance finding of gold.
Sounds like a far better system to me.
Thanks Antithetic for explaining these concepts to the average layman.
Your examples make perfect sense I must say.
It does now make sense that some type of fractional reserve system should be in place. What would concern me is if there are cases where there are no limit to the amount the banks can lend without being backed by deposits. If this is the case is it facetious to say that banks can generate money 'out of thin air'.
If not then it follows that any new 'injection' of these funds into the economy pushes up inflation.
As inflation rises the real spending power of my current account savings declines year on year. So I guess it is possible to lose money by putting it into a current account - especially if the interest rate offered is lower than the rate of inflation. I'm not sure how inflation could soar in Ireland alone in your example as this is all regulated centrally? In the US their dollar has slumped and it seems many investors & countries are selling off their dollar reserves. Could this happen to the Euro at some point in the future under poor monetary policy / future war?
Also, what wasn't touched on is the claims made about the federal reserve. If it is true that the Fed is a not owned or controlled by the US government (i know it is unclear who exactly controls it) why does the government not reclaim control of its right to print legal tender and begin to reduce their national debt? Does the government need a cash boost every time a war rolls around to finance it? If so is the interest from this cash boost paid to certain banks? If this is true is it a bold claim that the lenders in this scenario have a real and vested interest in war as a profit driver?
Again, please excuse layman terminology. I am aware that economics is a complex topic and also that varying concerns can be explained away by certain economic arguments however the existence of counter arguments and widespread criticism of the fed in particular leads me to believe it is not all cut and dry..
That said I'm beginning to be swayed by Antithetic's posts 0 -
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